Silver Fundamentals In Review (In Case You're Frustrated)

Many people keep asking me to discuss the fundamentals of silver. Ok. But they don't change much.

Over 100 years ago, in the late 1880's, Germany stopped using silver as money, going to a pure gold standard. This started an 80 year long trend of silver no longer being used as money. India abandoned silver in the Great Depression, flooding the world with silver that was no longer being used in their coinage. This pushed silver prices down to that 25 cents per ounce level. It had nothing to do with deflation or the depression, it was demonetization. Reduced demand results in lower prices.Today, no nation on earth uses silver as money.Thus, monetary demand can only change in one direction. It can only go up, from a baseline, now, of zero. If it goes up, and people start using silver as money, the demand will increase, and prices will increase.There is another major silver trend, this one 60 years long. Back at the end of WWII, the age of electronics began, and per capita silver usage in the USA increased ten fold, to a level that was sustained even until today. Other nations followed as they industrialized.The age of silver consumption has consumed nearly 1/2 of all the silver ever mined in all of human history. Fortunately, that amount of silver has been mined in the last 60 years, too! These two tidal forces (one, monetary demand returning, when two, world silver is scarce due to past consumption) will collide, with many others, to drive silver prices way up. Since these two forces are such long term trends, it can be understandable that I was early, by a decade, in my predictions of massively higher silver prices. The fundamentals about silver are the fundamentals about money.Today, we are in the age of inflation. Not deflation. Deflation is not lower prices. Inflation is "more money". Today, there is more electronic and paper money due to $8 trillion in bail outs, a $1.2 trillion dollar U.S. deficit, and an additional $1 trillion stimulus plan. Hence, paper prices of things will continue to go up. We are only in the midst of a minor counter cyclical trend, a dead cat bounce, a normal fluctuation, a bit of volatility on the way down in the value of paper money. Today, there is less silver, hence, silver prices will go up. We are only in the midst of a temporary down-spike in the value of silver prices, as silver prices will certainly rebound, and go back up, and exceed all old highs.